On Thursday November 18, I was delighted to deliver a lecture at St John’s University in New York, organized by the university’s Department of Philosophy. The subject was “The Changing Nature of Work – The Sharing Economy, Master/Servant, and the Right to Earn a Living.” (The slides are available below, courtesy of LinkedIN’s Slideshare service.)
The thesis of the lecture was that reductions in transaction costs have enabled the creation of new platforms that put people directly in touch with one other to do business via commercial contracts. In the past, workers providing services would generally do so as part of a firm, with which they would have an employment contract. Platforms negate the need for such contracts, allowing workers far more flexibility and freedom, which they appear to value highly.
However, there are two problems with this new form of work. First, most Western nations’ employment laws developed from a medieval idea that employment centered on a relationship between a master and a servant. When firms became the dominant providers of economic transactions, employment law maintained this framework in order to achieve certain societal goals, such as revenue collection (via taxes deducted from paychecks) and raising aggregate demand through high wages (via laws that privileged union representation in the workplace).
Second, employment law changed during the Progressive era to remove the ancient right to enter into commercial contracts (which the Goldwater Institute’s Tim Sandefur calls the right to earn a living). This means that government can interfere with the development of new platforms that facilitate independent work, and has every incentive to do so given its desire to deliver social goals through the employment contract.
The lecture ends with some scenarios for where the future of work could go, and posits some questions for policy makers to answer on the subject.